Some in Congress are considering ways to enact protectionist policies against China. Fortunately, 1,028 of America’s top economists, from all 50 states and top universities, have signed the following petition sponsored by the Club for Growth in opposition to protectionist policies against China. In addition to many other prominent and well-respected economists, signatories include Nobel Laureates Finn Kydland, Edward Prescott, Thomas Schelling, and Vernon Smith. The petition and names of the signers appears as full page ad in today’s Wall Street Journal.
We, the undersigned, have serious concerns about the recent protectionist sentiments coming from Congress, especially with regards to China.
By the end of this year, China will most likely be the United States’ second largest trading partner. Over the past six years, total trade between the two countries has soared, growing from $116 billion in 2000 to almost $343 billion in 2006. That’s an average growth rate of almost 20% a year.
This marvelous growth has led to more affordable goods, higher productivity, strong job growth, and a higher standard of living for both countries. These economic benefits were made possible in large part because both China and the United States embraced freer trade.
As economists, we understand the vital and beneficial role that free trade plays in the world economy. Conversely, we believe that barriers to free trade destroy wealth and benefit no one in the long run. Because of these fundamental economic principles, we sign this letter to advise Congress against imposing retaliatory trade measures against China.
There is no foundation in economics that supports punitive tariffs. China currently supplies American consumers with inexpensive goods and low-interest rate loans. Retaliatory tariffs on China are tantamount to taxing ourselves as a punishment. Worse, such a move will likely encourage China to impose its own tariffs, increasing the possibility of a futile and harmful trade war. American consumers and businesses would pay the price for this senseless war through higher prices, worse jobs, and reduced economic growth.
We urge Congress to discard any plans for increased protectionism, and instead urge lawmakers to work towards fostering stronger global economic ties through free trade.
To see the full list of the 1,028 economists who signed the petition click here.
MP: I, along with four other economists at the University of Michigan-Flint signed the petition: School of Management Dean Jack Helmuth, and Professors Yener Kandogan, Dennis Ellis and Chris Douglas.
See a related editorial in the WSJ here.
Most crimes involve a victim – someone who has been assaulted, raped, murdered, burgled, deceived by fraud, attacked, blackmailed, slandered, or otherwise damaged or harmed in some way. Ticket reselling or “scalping” is an exception, it’s a “victimless crime,” involving a voluntary buyer and a voluntary seller engaged in a mutually advantageous transaction for tickets to a sporting event or concert. Win-win. The buyer values the tickets more than the cash, and the seller values the cash more than the tickets.
Houses often sell for more than the list price, coins often sell for more than face value, cars sometimes sell for more than the sticker price, and thousands of bonds sell daily for more than face value. Why should tickets to the Superbowl or a Prince concert be any different?
Well, they’re not different any more in Minnesota, where the 94-year-old Minnesota law that made reselling tickets for more than face value a misdemeanor was erased from the books at 12:01 a.m. today, see the story “Scalp All You Want” here in the Twin Cities StarTribune.
Minnesota is now the 42nd state to decriminalize scalping. There are only 8 left.
Ethanol doesn’t burn cleaner than gasoline, nor is it cheaper. Our current ethanol production represents only 3.5 percent of our gasoline consumption — yet it consumes twenty percent of the entire U.S. corn crop, causing the price of corn to double in the last two years and raising the threat of hunger in the Third World. And the increasing acreage devoted to corn for ethanol means less land for other staple crops, giving farmers in South America an incentive to carve fields out of tropical forests that help to cool the planet and stave off global warming.
So why bother? Because the whole point of corn ethanol is not to solve America’s energy crisis, but to generate one of the great political boondoggles of our time. Corn is already the most subsidized crop in America, raking in a total of $51 billion in federal handouts between 1995 and 2005 — twice as much as wheat subsidies and four times as much as soybeans. Ethanol itself is propped up by hefty subsidies, including a fifty-one-cent-per-gallon tax allowance for refiners. And a study by the International Institute for Sustainable Development found that ethanol subsidies amount to as much as $1.38 per gallon — about half of ethanol’s wholesale market price.
The ethanol boondoggle is largely a tribute to the political muscle of a single company: agribusiness giant Archer Daniels Midland (ADM).
Today, ADM is the leading producer of ethanol, supplying more than 1 billion gallons of the fuel additive last year. Ethanol is propped up by more than 200 tax breaks and subsidies worth at least $5.5 billion a year. And ADM continues to give back: Since 2000, the company has contributed $3.7 million to state and federal politicians. MP: The chart above shows the 5-year return
From “Ethanol Scam: Ethanol Hurts the Environment And Is One of America’s Biggest Political Boondoggles,” in RollingStone Magazine
MP: The chart above shows the 5-year returnon ADM stock (+200%, top blue line) vs. the S&P500 (+60%, bottom red line).
The picture above (click to enlarge) shows a sign at St. Issac’s Cathedral in St. Petersburg, Russia. The church, designed to accommodate 14,000 standing worshipers, was closed in the early 1930s and reopened as a museum.
The top sign says “ENTRANCE TO THE MUSEUM” in Russian. If you can read Russian, you enter to the left and go to a separate ticket counter, which has a lower entrance fee than if you speak English, and enter to the right.
Indeed, Friedman once said, “Freedom is not the natural state of mankind. It is a rare and wonderful achievement. It will take an understanding of what freedom is, of where the dangers to freedom come from. It will take the courage to act on that understanding if we are not only to preserve the freedoms that we have, but to realize the full potential of a truly free society.”
So as we celebrate Milton Friedman’s birthday and achievements, we must continue his legacy and keep making the case for freedom.
Mr. Siems, senior economist and policy advisor at the Federal Reserve Bank of Dallas, writing in today’s Wall Street Journal
SAN FRANCISCO – From the state that popularized purse puppies, drive-thru dog washes and gourmet dog food delivery comes the latest in canine convenience — a company that contracts out dogs by the day to urbanites without the time or space to care for a pet full-time.
(HT: Sanil Kori)
The Missouri Civil Rights Initiative’s (MoCRI) proposed language for its November 2008 ballot measure, which has been approved by the Missouri Secretary of State Robin Carnahan:
Shall the Missouri Constitution be amended to prohibit any form of discrimination as an act of the state by declaring: The state shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of public employment, public education, or public contracting?
Language for the ballot measure, with changes, from Secretary of State Carnahan:
Shall the Missouri Constitution be amended to ban affirmative-action programs designed to eliminate discrimination against, and improve opportunities for, women and minorities in public contracting, employment, and education?
Hmmmmmmm…. that seems just a little bit different…..
As you might expect, the MoCRI filed a petition in the circuit court of Cole County legally challenging the changes in the ballot language.
From today’s WSJ, “Just Drill Baby,” by Pete DuPont:
The government reports that U.S. crude oil production declined to 1.9 billion barrels in 2005 from 3.5 billion in 1970, and the share of our oil that is imported has increased to 60% from 27% in 1985. Washington politicians will tell you this is an “energy crisis,” but America’s energy challenges are far more political than substantive.
First, we are not running out of oil. In 1920 it was estimated that the world supply of oil was 60 billion barrels. By 1950 it was up to 600 billion, and by 1990 to 2 trillion. In 2000 the world supply of oil was estimated to be 3 trillion barrels.
The U.S. has substantial supplies of oil and gas that could be accessed if lawmakers would allow it, but they frequently don’t. A National Petroleum Council study released last week reports that 40 billion barrels of America’s “recoverable oil reserves are off limits or are subject to significant lease restrictions”–half inshore and half offshore–and similar restrictions apply to more than 250 trillion cubic feet of natural gas. (We consume about 22 trillion cubic feet a year.)
Access to the 10 billion barrels of oil in Alaska’s Arctic National Wildlife Reserve has been prohibited for decades. Some 85 billion barrels of recoverable oil and 420 trillion cubic feet of natural gas exist on the Outer Continental Shelf, but a month ago the House again, as it did last year, voted down an amendment that would have allowed the expansion of coastal drilling for oil and natural gas. All of which leaves the U.S. as the only nation in the world that has forbidden access to significant sources of domestic energy supplies.
From a previous CD post:
Percentage of domestic oil resources currently off-limits in Arctic National Wildlife Refuge (ANWR) and the Outer Continental Shelf (OCS) : 78
Amount of Domestic oil currently off-limits: 131 billion barrels (that’s 131,000,000,000)
Oil imported annually from the Persian Gulf: About 1 billion barrels
Oil imported annually: About 5 billion barrels
Oil consumed annually in the US: About 7 billion barrels
Oil produced annually in the US: About 2 billion barrels
Number of years that domestic oil in the OCS could substitute for Persian Gulf imports: 60
Number of years that domestic oil in ANWR could substitute for Saudi imports: 25
If you haven’t noticed, the major presidential candidates—Republican and Democratic—are dodging one of the thorniest problems they’d face if elected: the huge budget costs of aging baby boomers.
Consider the outlook. From 2005 to 2030, the 65-and-over population will nearly double to 71 million; its share of the population will rise to 20 percent from 12 percent. Social Security, Medicare and Medicaid—programs that serve older people—already exceed 40 percent of the $2.7 trillion federal budget. By 2030, their share could hit 75 percent of the present budget, projects the Congressional Budget Office. The result: a political impasse.
The 2030 projections are daunting. To keep federal spending stable as a share of the economy would mean eliminating all defense spending and most other domestic programs (for research, homeland security, the environment, etc.). To balance the budget with existing programs at their present economic shares would require, depending on assumptions, tax increases of 30 percent to 50 percent—or budget deficits could quadruple. A final possibility: cut retirement benefits by increasing eligibility ages, being less generous to wealthier retirees or trimming all payments.
Little wonder politicians stay silent.
~Robert Samuelson in Newsweek, “When Silence Isn’t Golden.”